BMI View: Keeping in mind large underground potential, we maintain our optimistic outlook for Kazakhstan. However, we continue to underline risks related to resource nationalism and geological complications on major prospects that could deter foreign investors. Kazakhstan's choice to block the sale of ConocoPhillips' Kashagan stake in order to allocate it to CNPC illustrates the uncertainty of the business environment that surrounds the country.

The main trends and developments we highlight for Kazakhstan's oil and gas sector are:

Kazakhstan has been strengthening its trading ties with China. The decision to prioritise China National Petroleum Corporation (CNCP) over India's Oil and Natural Gas Corporation (ONGC) for the acquisition of ConocoPhillips' Kashagan stake supports the view that Kazakhstan is supporting a stronger integration with China. In addition, China's Sinopec bought Lukoil's 50% stake in Kazakh based Caspian Investment Resources, for a value of around USD1.2bn and become the sole owner of the company. This recent purchase further highlighted the push by China to strengthen its position in Kazakhstan in order to secure energy resources to meet rising domestic demand.